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Netgear Surges 26% in Debut

The tech company's strong showing adds to evidence that the IPO market is reviving.

August 01, 2003|From Bloomberg News and Times Staff Reports

Stock of computer networking equipment maker Netgear Inc. soared 26% in the firm's trading debut Thursday -- a fresh sign that the drought in the initial public offering market is over.

Another IPO seemed poised for a strong first trading session today: Citadel Broadcasting Corp., the sixth-largest U.S. radio network, sold 22 million shares Thursday at $19 each, at the top of the expected range of $17 to $19 a share.

Citadel will begin trading today on the New York Stock Exchange under the symbol CDL.

Netgear, which sold 7 million shares at $14 each Wednesday, rocketed $3.69 to close Thursday at $17.69 on Nasdaq, trading under the symbol NTGR. The stock rose as high as $19.25.

"It's a bullish call for IPOs," said William Smith, who helps manage the IPO Plus Fund in Greenwich, Conn.

Investors have warmed to new stock deals in recent months after sending the market into a deep freeze for much of last year and early this year. A rebound in the stock market overall has bolstered investors' willingness to take a chance on new companies, analysts say.

That has been particularly good news in California: Recent IPOs from companies including Redwood City-based remote-access-computing software firm iPass Inc., Agoura Hills-based digital technology company Digital Theater Systems Inc. and Long Beach-based managed-care firm Molina Healthcare Inc. have risen sharply from their offering prices.

Santa Clara, Calif.-based Netgear, which makes computer networking equipment for small businesses and households, has seen its sales boom in recent years despite weakness in the tech market overall.

Citadel, based in Las Vegas, owns and operates 144 FM and 63 AM radio stations in 24 states. It was purchased by buyout firm Forstmann Little & Co. in 2001.

The Citadel IPO is a sign that rising stock prices are allowing private equity firms to take companies public to lock in gains. That could encourage more venture-capital funds to step up their investment in young companies, experts said.

Seventeen IPOs in the U.S. this year have raised $3.49 billion in all, according to Bloomberg data.

Also Thursday, International Steel Group Inc., the second-largest integrated steel producer in North America, said it planned an IPO of as much as $250 million of stock.

Investor Wilbur Ross created International Steel last year by buying the mills of bankrupt LTV Corp. The firm has since acquired assets of bankrupt steelmakers Acme Metals Inc. and Bethlehem Steel Corp.

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